Are Delta SkyMiles The New Bitcoin?

If you haven’t been reading the news recently, 2 important things have happened in the past week.

1. One of the most popular Bitcoin exchanges, Mt. Gox (based in Japan), vanished overnight with around $400 million USD worth of Bitcoin.

2. Delta moved to a full revenue based frequent flyer program for 2015.

While I could re-hash all the arguments why Delta going to a revenue based frequent flyer program is a bad thing for most non-corporate flyers, I’m fairly certain everyone already knew how “valuable” SkyPesos were. However if you are interested, ViewFromTheWing and OneMileAtATime have covered the new Delta changes extensively. If you are still a Delta apologist flyer, you either live in Atlanta or are delusional…

With all the Bitcoin and Delta coverage in the national news, it was hard not to think of frequent flyer miles when U.S Senators talk about Bitcoin being a “unregulated virtual currency”. Of course, the estimated 15-trillion to 20-trillion frequent flyer miles outstanding also have ZERO regulation and are a virtual currency…

Anyway yesterday, U.S Senator Manchin said that he wanted to ban Bitcoins in the United States. As I was reading the article (which you can find here), naturally the first thing that came to mind were Delta SkyMiles (and how I wish they were banned) so I started replacing “Bitcoin” with “Delta SkyMiles” in the article below.

When you sub in Delta SkyMiles for Bitcoin, it is hard not to argue with some of Senator’s valid points…

On Wednesday, Sen. Joe Manchin (D-W. Va) wrote a letter to regulatory agencies arguing that Bitcoin Delta SkyMiles are “disruptive to our economy.”

“The clear ends of Bitcoin Delta SkyMiles for either transacting in illegal goods and services mileage runs or speculative gambling awards make me wary of its use,” Manchin wrote. “I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.”

Mt. Gox Delta, which is based in Tokyo Atlanta but has become one of the most well-known exchanges frequent flyer programs around, was still inactive worthless on Wednesday after an unverified document obtained by Bitcoin entrepreneur Ryan Selkis bloggers seemed to show that nearly $400 million in bitcoins was missing SkyPesos were going to somehow become more worthless. Mt. Gox Delta had already suspended inflated withdrawals awards last month year.

The latest incident raises new questions about Bitcoin Delta’s fate in Washington. The virtual currency grabbed headlines in November when Sen. Tom Carper (D-Del.), chair of the Senate Homeland Security and Governmental Affairs travel hacking committee, held a hearing on it. On Tuesday, Carper called the news about Mt. Gox Delta “unacceptable.”

“My staff is working closely working with relevant federal agencies to determine what lessons can be learned from this failure to help ensure this does not happen here in the United States.” Carper said in a statement.

According to a committee aide, regulators are now on heightened alert.

“What we’ll see is an accelerated push to get information on the virtual currency space,” said the aide, who was not authorized to speak publicly. “Whereas before there was some sense you could wait a little bit to let the space evolve, it now seems there’s a stronger push to get smart.”

Some agencies have been highly engaged on Bitcoin Delta SkyMiles; the Treasury Department BoardingArea’s Financial Crimes Enforcement Network (FinCEN) ViewFromTheWing (VFTW) was the first to issue policy guidance on the currency last year in 2011. Others, such as the Consumer Financial Protection BureauDeltaPoints, may have more learning to do, according to the aide.

Mt. Gox Delta SkyMiles’s collapse has regulators wondering what they’d do if the same thing ever happened in the United States to American Airlines. It’s not an academic question; the country may soon see its first Bitcoin exchange final legacy devaluation thanks to SecondMarket American Airlines CEO Barry Silbert Doug Parker.

Silbert Parker believes that the downfall of Mt. Gox Delta SkyMiles was a good thing for the Bitcoin frequent flyer ecosystem. So do the Winklevoss brothers, who are still working with the federal government to set up a Bitcoin Delta SkyMiles ETF.

“Although Mt. Gox Delta was one of the earliest exchanges frequent flyer programs, its demise and the rumored problems associated with it further demonstrate the need for U.S. regulation of bitcoin exchanges frequent flyer programs,” he said.

It’s not clear what the federal government could have done to protect consumers from losing their money miles to Mt. Gox Delta. But with the bloom of Bitcoin services frequent flyer miles here in the United States, federal officials will need to confront that question sooner rather than later.

San Francisco

A few weeks ago, I decided to plan an impromptu trip to San Francisco at the beginning of August. Although I have been there a few times before, I have family and frequent flyer friends that live out there, so I figured another visit was due.

For anyone that has been to San Francisco, you know that not only are the hotels expensive but just to fly into San Francisco can be expensive depending on where you are coming from.

As I constantly try to stress, you should always be accumulating miles even if you don’t have a destination in mind and this San Francisco trip is a prime example.

When I did my last round of credit card applications back in June, I had no idea that this San Francisco trip was even on the horizon, but I went ahead and got some new cards knowing that a random trip might happen somewhere down the line. I am happy I did because as you will see, it ended up saving me quite a bit of money.

Delta Miles

Since I live in Chicago, the options to get to San Francisco are plentiful. Chicago is a hub for Southwest, United, and American. Not to mention Virgin America flies direct from ORD to SFO.

Unfortunately in terms of award travel for the dates I was looking, Southwest was really expensive, there was no availability with United or American, and I don’t have any Virgin America points!

Normally that would be quite a conundrum since it seemed all my award options were dead ends and I might have to pay out of pocket for the ticket which was a cheap $500!

Thankfully I remembered that in June, for no real reason, I had gotten the Delta AMEX which got me 30,000 SkyMiles.

I already had 15,000 SkyMiles from previous Delta trips, so with the new card, I reached 45,000 SkyMiles.

From talking to and reading posts by Delta Elites, I have heard horror stories about Delta SkyMiles or “SkyPesos” as they are affectionately called. However since I have never redeemed SkyMiles before, I didn’t really understand the fuss.

Let me just say that Delta SkyMiles live up to their hype of being called SkyPesos.

To book a standard Chicago (ORD or MDW) – San Francisco award on Delta using SkyMiles took me over 1 hour.

Why you might ask?

1. Delta’s Award Engine times out after 10 minutes forcing you to restart your search.

2. For Multi City (in my case flying out of ORD and into MDW), it doesn’t show pricing. So while one flight might be 40,000 SkyMiles, picking another flight might be 60,000 SkyMiles. There is no way to find out what the prices are until you get to the end. So after I picked what I thought were the flights I wanted, I got to the end only to see the price was 60,000 for an Economy award when it was 40,000 earlier.

3. I tried to add a 23 hour stop over and the price magically jumped to 90,000 SkyMiles for no reason.

After spending over an hour trying to book this “simple” award, I finally booked one that connects via Detroit for 40,000 SkyMiles. I thought 40,000 SkyMiles were alot for a Domestic Economy award but in talking to Delta Flyers on Twitter, apparently that is “Low Level”.

Needless to say, SkyMiles are an absolute can of worms and I am happy that I was able to use them up and never have to deal with them again.

Although I wasted an hour on something that would have taken 5 minutes on United, American, or Southwest, by getting the Delta AMEX in June and earning 35,000 miles, I was able to save myself around $500!

Lodging

Unlike air travel, where there are only a set number of options to get to your destination, with lodging there are hundreds of options from chain hotels, hostels, airbnb, friend’s couch, etc.

In the past, I stayed away from hotel credit cards for that exact reason. I figured that airline miles were far more valuable than hotel points, since you have so many different options for lodging.

While I still believe that airline miles hold the most value, in places like San Francisco, almost all lodging is expensive, so redeeming hotel points might make sense.

AirBnb

For the first night, I am staying in a place that I found off of Airbnb for $100.

The reason for doing Airbnb over a hotel is because the next morning, I am going to Sonoma early in the AM with my Cousin, so I figured there was no need to stay in a proper hotel.

Plus it doesn’t hurt that Airbnb happens to be almost 1/3rd the price of staying in a hotel!

Fairmont Sonoma Mission Inn

While there were options for Sonoma on Airbnb, back in June I had applied for the Fairmont Card which got me 2 free nights.

Apparently, the nights are kind of difficult to use because unlike Hyatt, Fairmont seems to cap the amount of award stays that can be used at each property.

I called Fairmont and it seemed there was availability to use my 2 free night certificates at the Fairmont Sonoma Mission Inn, so I decided to use them there.

When I originally got these 2 free night certificates in June, I figured I would use them in Whistler or some other ski destination in the Winter, but from the looks of it, that might be difficult due to the award caps.

Booking my 2 free nights at the Fairmont Sonoma Mission Inn also showcased what I call the “Award Dilemma” that many of us Frequent Fliers face.

The issue is very simple. Since these free night certificates can be used at any number of properties worldwide, our first instinct is to save the certificates to use at the most expensive property possible!

Many times this makes sense, however when the opportunity to use the certificates for an actual stay comes up, like at the Fairmont Sonoma Mission Inn, it is difficult to justify because the property might not be the absolute “best value”.

For myself, it took a few days of deep thought to finally pull the trigger and use the 2 free night certificates because I knew there were more expensive Fairmont properties!

In the end, I think I am going to be happy that I used the 2 free nights because it will save me $600 and get 2 nights at a great property!

Radisson Fisherman’s Wharf

For many months now I have been encouraging people to check out Club Carlson’s loyalty program.

Many people still write Club Carlson off because their properties aren’t exactly up to par with Marriott, Hyatt, or Starwood. However when you look into how flexible their award program is, it can save you some serious cash!

Way back in October 2012, Radisson was having a Stay 1 Night, Get 1 Night Free promotion which I talked about here and here, and told everyone that this was a great deal for saving money on future stays.

I personally stayed 1 night for $77 at the Radisson O’Hare during the Chicago Seminars and then another $87 stay at Radisson LAX during FTU LAX.

Those 2 stays, one which was a mattress run and the LAX one being an actual stay, earned me 2 free night certificates for Radisson.

At the time I thought I would use the free night certificates in NYC, but I ended up using one of the certificates in Austin in March 2013, which I talked about here.That $77 free night certificate saved me from shelling out $300+ for a hotel room in Austin during SxSW.

I had actually forgot about the 2nd certificate since I have multiple accounts but thankfully remembered and decided to use it in San Francisco.

The current retail rate for the Wednesday night I am staying there is a whopping $400 a night!

I couldn’t make up these prices if I wanted to!

Recap

Although San Francisco can be extremely expensive for tourists, if you are flexible and start planning a few months in advance, it is fairly easy to have an amazing 4-5 star trip for next to nothing.

As you saw from my example, using Delta SkyMiles, I was able to save around $500 in airfare! While I was happy to save some money, just imagine if you had a family of 4 and were visiting San Francisco and didn’t have any miles! It would be over $2,000 just for airfare!

For hotels, by doing some long range planning way back in October 2012, I was able to save some serious money on lodging. By having 2 cheap stays at the Radisson at ORD and LAX, for around $155 total, I was able to stay those 2 nights but ALSO get 2 free night certificates. By using one free night in Austin and another free night in San Francisco, I was able to get over $700 in value out of those 2 free nights which cost me around $155. Not a bad rate of return!

All in all, thanks to miles and points this 4 night, 5 day trip to San Francisco will cost me around $100 out of pocket for airfare and lodging!

I would obviously never pay the full retail amount for the airfare and lodging, which would be around $1,500 ($500 Delta + $600 Fairmont + $400 Radisson), but obviously some people do pay that amount or the prices wouldn’t be so high to begin with!

With the $1,400 I saved using miles and points, I can spend some of that savings on nice dinners or wine tours without having to worry about how much damage this trip is going to do to my bank account since it was almost free!

That being said, the main reason why I write up these logistics posts is to show that saving and earning frequent flyer miles can save you REAL MONEY over the long run!

I don’t have $1,500 to spend on a 4 day trip to San Francisco, but I certainly do have $100 and with a little legwork, you too can easily take one of these trips for next to nothing!